Monday, April 12, 2010

Continued Bullish Sentiment: The CBOE Equity Put-Call Ratio

We are seeing unusual levels of bullish sentiment in the CBOE equity put-call ratio, with the lowest level of put buying relative to call purchases since the market rally began. Indeed, the excellent SentimenTrader site reports that we haven't seen such bullish options sentiment since 2000, which marked a very important stock market peak.

Meanwhile, we saw 301 new 52-week highs among NYSE common stocks, as reported by Decision Point, but that is down from levels reached last week. When bullish sentiment cannot translate into incremental market strength, that turns me cautious..

About Me

Author of The Psychology of Trading (Wiley, 2003), Enhancing Trader Performance (Wiley, 2006), and The Daily Trading Coach (Wiley, 2009) with an interest in using historical patterns in markets to find a trading edge. I am also interested in performance enhancement among traders, drawing upon research from expert performers in various fields. I took a leave from blogging starting May, 2010 due to my role at a global macro hedge fund. Blogging resumed in February, 2014, along with regular posting to Twitter and StockTwits (@steenbab).